With uncertainty on future revenues, the core focus for improving financial health is in reducing their total cost of ownership (TCO) through digital transformation as a catalyst to elevate from financial stability to greater levels of profitability.
In oil and gas, which is an unavoidably asset-heavy industry, TCO provides a lens for understanding the long-term value of capital projects.
Capturing the benefits of digitalization presents an opportunity to make significant improvements to OPEX over the asset’s lifetime, therefore making a more compelling case for new investments.
Oil and gas companies have a lot of assets, in terms of the machinery, equipment, and tooling required to manage on-site operations.
Oil and gas companies tend to work with multiple equipment assets that have been sourced from several different original equipment manufacturers (OEMs).
Oil and gas companies have a lot of options around how they allocate capital, and the opportunity cost of investments can be significant.
Digitalization can help in optimizing the use of personnel and assets to reduce potential cost burdens and get more value out of assets.
Taking a concentrated focus on TCO means the entire lifecycle can be reviewed together and opportunities can be identified for where digital solutions can lower costs, help take a more asset-light or asset-optimized approach and help customers to make better use of knowledge and personnel.
The key to excelling over this period is to have an open mind as to what’s possible.
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